Malaysian gaming mogul K.T. Lim will continue his push to buy more than 10 per cent of
Echo Entertainment
after a partial sell-down of his stake created confusion among investors.

Market sources were expecting Genting’s Hong Kong arm to buy the 4.8 per cent stake in Echo sold by its Singapore division late on Wednesday.

But underwriter Citigroup has told market sources that the Genting Singapore stock was allocated to institutional investors at $3.99 apiece and Genting Hong Kong didn’t participate in the trade.

Genting Hong Kong said in a statement that it “will continue to hold its investment in Echo Entertainment and remains committed to the application to the NSW Independent Liquor and Gaming Authority and Queensland Office of Liquor and Gaming Regulation for approval to acquire more than 10 per cent voting power in Echo."

Genting incurred a $7 million loss from the sale of the stake.

The group’s average entry price into Echo was $4.17 a share. However, market sources said that after stripping out currency movements, Genting would have broken even on the transaction.

The stock fell 4.2 per cent to $3.93 on Thursday morning as investors digested the stake sale.

Sydney-based Echo has been the subject of a tussle between billionaire James Packer and Genting this year, as both parties vie to pick up larger stakes in Echo.

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The expectation of a takeover battle for the company that owns Sydney’s The Star casino helped the shares but they have fallen since
Crown Ltd
chairman
Mr Packer announced he was after only 25 per cent of the company.

Crown and Genting are both awaiting regulatory approval to buy more than 10 per cent of Echo.

Genting Singapore said of its sale: “This comes after a review by the company to rationalise its investments portfolio."

It is understood Genting’s Singapore and Hong Kong arms acted independently when buying their Echo shares.

Genting Singapore used JPMorgan to buy its stake, while the Hong Kong business used Royal Bank of Scotland, now owned by Malaysia’s CIMB, to buy its shares.

Mr Packer splashed out $256.6 million on a 10 per cent stake in Echo in February.

Crown wants to build a luxury hotel and casino in Sydney’s Barangaroo precinct and would have to bid against Echo or try to work in partnership with it because Echo holds the sole casino licence in NSW until 2017.

The Genting casino empire, which control’s Asia’s second biggest gaming company, Genting Singapore, emerged as a 9.7 per cent shareholder in Echo in June.

Mr Packer has met Mr Lim to discuss a potential alliance over Echo but it is unclear whether the billionaires can reach an agreement.

Mr Packer has also discussed a potential joint venture over high-roller gamblers with Echo.

A joint venture in the Australian VIP market, which caters largely to well-heeled gamblers from across Asia, would align Crown and Echo’s interests in the only space in which they now compete.

Both companies face rising competition in the VIP sector, with new casinos being built in Macau, the Philippines and elsewhere in Asia.

A deal would also pave the way for co-operation on a new luxury hotel and casino at Sydney’s Barangaroo, where Crown has started talks with developer
Lend Lease
even though Echo holds the monopoly casino licence in Sydney.